DCIT., Circle-2(1,) Hyderabad, Hyderabad V. M/s KVR Rail Infra Projects Private Limited, Secunderabad

ITA 1818/HYD/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3026 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU; MYTHLI RANI
• Assessee Lawyers: K C DEVADAS
• Keywords: Bogus purchase; Search and seizure; Difference of opinion; Revised return; Reason to believe; Change of opinion
• Section: 69C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1817/HYD/2014 : ASSESSMENT YEARS 2009- 10 ITA NO.1818/HYD/2014 : ASSESSMENT YEARS 2010- 11 DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD V/S M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. (PAN - AABCK 6791 Q ) (APPELLANT) (RESPONDENT) ITA NO.1754/HYD/2014 : ASSESSMENT YEARS 2011- 12 M/S. K.V. R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. (PAN - AABCK 6791 Q ) V/S DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C.DEVADAS DEPARTMENT BY : SMT. MYTHLI RANI & SHRI B.KURMI NAIDU DATE OF HEARING 15 .1 2 .2015 DATE OF PRONOUNCEMENT 03 . 02 .201 6 O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THERE THREE APPEALS TWO BY THE REVENUE AND ONE BY THE ASSESSEE, ARE DIRECTED AGAINST SEPARATE ORDERS OF T HE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) FOR THE ASSESSM ENT YEARS 2009- 10 TO 2011-12. SINCE COMMON ISSUES ARE INVOLVED, TH ESE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 2 REVENUES APPEALS: ITA NO.1817/HYD/2014 : ASSESSMENT YEARS 2009- 10 ITA NO.1818/HYD/2014 : ASSESSMENT YEARS 2010- 11 2. LET US TAKE UP FOR CONSIDERATION FIRST, THE APP EALS OF THE REVENUE FOR THE ASSESSMENT YEAR 2009-10 AND 2010-11 , VIZ. ITA NOS.1817-1818/HYD/2014, WHICH ARE DIRECTED AGAINST SIMILAR BUT SEPARATE ORDERS OF THE LEARNED CIT(A) III, HYDERABA D, BOTH DATED 16.9.2014, SINCE THE GROUNDS OF APPEAL GO TO THE VE RY ROOT OF THE MATTER I.E. JURISDICTION FOR REOPENING THE ASSESSME NT. 3. GROUNDS URGED BY THE REVENUE IN APPEAL FOR ASSE SSMENT YEAR 2010-11 READ AS FOLLOWS- 1. THE CIT (APPEAL) ERRED IN HOLDING THAT REOPENIN G OF ASSESSMENT IS BAD IN LAW AND THAT THE ADDITION ON THE FACTS OF THE CASE DOES NOT MERIT. 2. THE CIT (APPEAL) ERRED IN NOT APPRECIATING THE F ACT THAT THE REOPENING IS VERY MUCH WITHIN THE AMBIT OF LAW AND IS SUPPORTED BY THE APEX COURT IN THE CASE OF CIT VS PVS BEEDIES PVT LTD (1999) 237 ITR 0013. 3. THE CIT (APPEAL) ERRED IN NOT APPRECIATING THE F ACT THAT THE ASSESSEE DURING THE COURSE OF RE- ASSESSMENT PROCEEDINGS FAILED TO PROVE THE EXISTENCE AND GENUINENESS OF THE PARTIES DESPITE REPEATED OPPORTUNITIES. 4. THE CIT (APPEAL) GROSSLY ERRED ON FACTS IN DELET ING THE ADDITION OF RS.3,50,24,700/- IN A.Y 2010-11 WHEREAS CIT (APPEAL) UPHELD THE ADDITION OF RS.2 , 23 , 24,851/- IN A.Y 11- 12 ON ACCOUNT OF PAYMENT MADE TO THE SAME PARTIES I.E., M/S. PREMIER ENGINEERS, M/ S MALLU SLEEPERS PVT LTD AND M/ S SAIRAM ENTERPRISES. 5. THE CIT (APPEAL) FAILED TO NOTE THAT WHEN PAYMEN T MADE BY ASSESS EE IN AY 2011-12 TO THREE PARTIES IS HELD AS NOT GENUINE IN APPEAL, ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 3 THEN HOW THE SAME COULD BE ALLOWED AS GENUINE IN A.Y 2010-11, WHEN THE FACTS ARE SAM E FOR BOTH THE YEARS. TH E D E CISION OF THE CIT (APPEAL) LACKS CONSISTENCY. 6. ANY OTHER GROUND THAT WOULD BE RAISED DURING TH E COURSE OF APPELLATE PRO C E E DINGS . EXCEPT FOR GROUND NO.4, REST OF THE GROUNDS RAISED IN THE APPEAL FOR 2009-10 ARE IDENTICAL. GROUND NO.4 FOR THAT YEAR RE ADS AS FOLLOWS- APPEAL- THE CIT(APPEAL) GROSSLY ERRED ON FACTS IN DELETIN G THE ADDITION OF RS.26,43,46,059/- IN A.Y 2009-10 WHEREA S CIT(APPEAL) UPHELD THE ADDITION IN A.Y 11-12 ON ACC OUNT OF PAYMENT MADE TO THE SAME PARTY I.E. M/S. PREMIER ENGINEERS. THE FACTS IN APPEAL FOR ASSESSMENT YEAR 2009-10 ARE STATED HEREIN FOR THE SAKE OF CONVENIENCE AND CLARITY. 4. BRIEFLY, FACTS OF THE CASE ARE THAT THE RESPOND ENT-ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF T HE COMPANIES ACT, 1956, ENGAGED IN THE BUSINESS OF EXECUTION OF TURN- KEY RAILWAY PROJECTS. FOR THE ASSESSMENT YEAR 2009-10, IT FILE D ITS RETURN OF INCOME ON 30.9.2009 DECLARING A TOTAL INCOME OF RS. 2,83,81,823. SUBSEQUENTLY, SURVEY WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE-COMPANY ON 20.9.2010. CONSEQUENT UPON SAID SURVEY OPERATIONS, ASSESSEE COMPANY FILED REVISED RETURN O F INCOME, OFFERING PROFIT AT THE RATE OF 8% OF THE TURNOVER, AND DECLA RING A TOTAL INCOME OF RS.8,24,19,420. THE ASSESSMENT WAS COMPLETED UNDER S.143(3) ON 31.12.2010, ACCEPTING THE RETURNED INCOME AS PER TH E REVISED RETURN. 5. SUBSEQUENTLY, A NOTICE UNDER S.148 WAS SERVED O N THE ASSESSEE COMPANY TO FILE THE RETURN OF INCOME, IN R ESPONSE TO WHICH ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 4 THE ASSESSEE COMPANY FILED A LETTER STATING THAT TH E REVISED RETURN OF INCOME FILED EARLIER MAY BE TREATED AS THE RETURN I N RESPONSE TO THE NOTICE UNDER S.148. SUBSEQUENTLY, THE ASSESSING OF FICER COMPLETED THE RE-ASSESSMENT PROCEEDINGS DETERMINING THE TOTA L INCOME OF THE ASSESSEE AT RS.46,28,60,670, AFTER MAKING AN ADDITI ON OF RS.38,04,41,252 AS AGAINST RETURNED INCOME OF RS.8, 24,19,420, VIDE ORDER OF ASSESSMENT DATED 31.3.2014 PASSED UNDER S .143(3) READ WITH S.147 OF THE ACT. 6. THE ONLY DIFFERENCE IN THE FACTUAL ASPECTS FOR THE ASSESSMENT YEAR 2010-11 IS THAT WHILE THE INCOME R ETURNED ORIGINALLY WAS RS.5,20,09,804 AND THE SAME WAS REVISED SUBSEQU ENT TO SURVEY OPERATIONS TO RS.8,31,22,084 AND ORIGINAL ASSESSMEN T WAS COMPLETED ORIGINALLY ON SUCH REVISED INCOME, RE-ASSESSMENT WA S ULTIMATELY COMPLETED ON A TOTAL INCOME OF RS.13,88,97,680, AFT ER MAKING AN ADDITION OF RS.5,57,75,598 ON ACCOUNT OF UNEXPLAINE D EXPENDITURE TOWARDS BOGUS PURCHASES/WORKS, VIDE ORDER OF ASSESS MENT DATED 31.3.2014. 7. AGGRIEVED BY THE RE-ASSESSMENTS MADE AS ABOVE, APPEALS WERE PREFERRED BEFORE THE COMMISSIONER OF INCOME-TA X(APPEALS) III, HYDERABAD, WHO VIDE IMPUGNED ORDERS DATED 16 TH SEPTEMBER, 2014 HELD THAT THE RE-ASSESSMENT PROCEEDINGS INITIATED WERE INVALID BECAUSE RE-ASSESSMENT PROCEEDINGS WERE INITIATED B Y MERE CHANGE OF OPINION. EVEN ON MERITS, HE HELD THAT THE ADDITION S MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDI TURE ARE NOT SUSTAINABLE. 8. AGGRIEVED BY THE ORDERS OF LEARNED CIT(A) AS AB OVE, REVENUE IS IN APPEAL FOR BOTH THE YEARS. ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 5 9. LEARNED CIT-DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY CONTENDED THAT THE INFORMATION IN THE SUBSEQUENT AS SESSMENT YEAR I.E. 2010-11 WOULD CONSTITUTE VALID INFORMATION FOR REOP ENING THE ASSESSMENT FOR ASSESSMENT YEARS 2009-10 AND 2010- 11, AND THEREFORE, THE ORDER OF THE CIT(A) SHOULD BE QUASH ED. 10. ON THE OTHER HAND, THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT BASED ON THE VERY SAME SET OF BOOKS OF ACCOUNT, WHICH WERE AVAILABLE AND CONSIDERED AT THE TIME OF ORIGIN AL ASSESSMENT PROCEEDINGS, RE-ASSESSMENT PROCEEDINGS WERE INITIA TED AND CONCLUDED AND AS SUCH, REOPENING OF THE ASSESSMENT IS NOT VAL ID. IN THIS BEHALF, HE RELIED ON THE FOLLOWING DECISIONS- (A) CIT V/S., USHA INTERNATIONAL LTD. (348 ITR 485)-DEL . (B) GKN SIGNER METALS LTD. V/S. ACIT (371 ITR 225)-BOM. (C) DEEPAKBHAI RAMJIBHAI PATEL V/S. ITO (366 ITR 1 34)-GUJ. 11. FURTHER, IT IS SUBMITTED THAT CONSIDERING TH E DEFICIENCIES IN THE SAID BOOKS OF ACCOUNT, THE ASSESSING OFFICER HA D RIGHTLY AGREED TO ACCEPT THE PROFIT ESTIMATED BY THE ASSESSEE AT 8% O F THE TURNOVER, REJECTING THE BOOKS OF ACCOUNT. WHEN INCOME IS DETE RMINED BY RESORTING TO ESTIMATION BY REJECTING THE BOOKS OF A CCOUNT, NO OTHER ADDITION CAN BE MADE ON THE BASIS OF SUCH BOOKS REJ ECTED. IN THIS CONNECTION, HE RELIED UPON THE DECISIONS OF JURISDI CTIONAL HIGH COURT IN THE CASES OF INDWELL CONSTRUCTIONS PVT. LTD. V/S. C IT(232 ITR 276), CITV/S. INTER CONTINENTAL CONSTRUCTIONS (372 ITR 14 1) AND CIT V/S. RAMCHANDRA REDDY (372 ITR 77). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT THE PROFIT OF THE ASSESSEE WAS ESTIMATED AT 8% OF THE TURNOVER, WITHOUT GOING BY THE BOOK ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 6 RESULTS. THE INCOME DECLARED BY THE ASSESSEE ON THA T BASIS IN THE REVISED RETURN HAS BEEN ACCEPTED BY THE ASSESSING O FFICER IN THE ORIGINAL ASSESSMENT ORDER PASSED UNDER S.143(3). T HUS, INCOME HAS BEEN DETERMINED IGNORING THE BOOK RESULTS. ONCE INC OME HAS BEEN DETERMINED IGNORING THE BOOKS OF ACCOUNT, AS HELD B Y THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (SU PRA), THE QUESTION OF MAKING ANY FURTHER ADDITION, BASED ON THE VERY S AME BOOKS OF ACCOUNT, WHICH HAVE BEEN IGNORED, DOES NOT ARISE. FURTHER, THIS POSITION OF ESTIMATED INCOME DECLARED BY THE ASSESS EE IN THE REVISED RETURN HAVING BEEN ACCEPTED BY THE ASSESSING OFFICE R IN THE ORIGINAL ASSESSMENT, BASED ON THE VERY SAME SET OF BOOKS WHI CH HAVE BEEN IGNORED, ANY ATTEMPT TO MAKE ANY FURTHER ADDITION, WOULD AMOUNT TO ONLY CHANGE OF OPINION. SUCH REOPENING OF ASSESSMEN T BASED ON MERE CHANGE OF OPINION CANNOT BE APPROVED IN THE LIGHT O F THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR IND IA LTD. (SUPRA), WHEREIN IT HAS BEEN HELD AS FOLLOWS- HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETAT ION TO THE WORDS REASON TO BELIEVE FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF MERE CHANGE OF OPINION, WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW A ND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS TH E POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTA IN PRECONDITIONS AND IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED, AS CONTE NDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSE SSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF CHANGE OF OPI NION AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. UNDE R THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS REASON TO BELIEVE BUT ALSO INSERTED THE WORD OPINION IN SE CTION 147 OF THE ACT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COM PANIES AGAINST OMISSION OF THE WORDS REASON TO BELIEVE, PARLIAMENT REINTRODU CED THE SAID EXPRESSION AND DELETED THE WORD OPINION ON THE GROUND THAT IT WO ULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBELOW THE REL EVANT PORTION OF CIRCULAR NO. 549 DATED OCTOBER 31, 1989 ([1990] 182 ITR (ST. ) 1, 29), WHICH READS AS FOLLOWS : 7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO REINTRODUCE THE EXPRESSION `REASON TO BELIEVE IN S ECTION 147.-A ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 7 NUMBER OF REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS `REASON TO BELIEVE FROM SECTION 147 AND THEIR SUBSTITUTION BY THE `OPINIONOF THE ASSESSING OFFICE R. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, `RE ASON TO BELIEVE HAD BEEN EXPLAINED IN A NUMBER OF COURT RU LINGS IN THE PAST AND WAS WELL SETTLED AND ITS OMISSION FROM SEC TION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO R EOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLAY THE SE FEARS, THE AMENDING ACT, 1989, HAS AGAIN AMENDED SECTION 147 T O REINTRODUCE THE EXPRESSION `HAS REASON TO BELIEVE IN PLACE OF THE WORDS `FOR REASONS TO BE RECORDED BY HIM IN WRITING , IS OF THE OPINION. OTHER PROVISIONS OF THE NEW SECTION 147, HOWEVER, REMAIN THE SAME. FURTHER, NO DOUBT, INFORMATION OBTAINED DURING THE COURSE OF SUBSEQUENT ASSESSMENT PROCEEDINGS WOULD BE VALID FO R REOPENING THE ASSESSMENT FOR EARLIER ASSESSMENT YEAR AS HELD BY T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF MULTISCREEN MEDIA (P.) LTD. VS. UNION OF INDIA (324 ITR 54) BUT IN A CASE WHERE THE AO HAD COME TO A DIFFERENT CONCLUSION IN THE SUBSEQUENT ASSESSMENT PROCEEDINGS ON THE SAME SET OF FACTS, THIS WOULD ONLY BE A MERE CHANGE OF OPINI ON. IN ORDER TO ESTABLISH THAT REOPENING OF THE ASSESSMENT FOR EARL IER ASSESSMENT YEAR IS NOT A MERE CHANGE OF OPINION, THE REVENUE MUST D EMONSTRATE THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDING FOR THE SUBSEQUENT ASSESSMENT YEAR THAT SOME NEW INFORMATION OR MATERI AL HAD BEEN BROUGHT ON RECORD WHICH WAS NOT AVAILABLE WHEN THE ASSESSMENT ORDER FOR EARLIER YEAR WAS PASSED. IN THE PRESENT CASE, ADDITION ON ACCOUNT OF BOGUS PURCHASES HAD BEEN MADE IN THE ASSESSMENT YEAR 2011-12 ONLY FOR THE REASON THAT THE ASSESSEE-COMPANY HAD F AILED TO PRODUCE THE CREDITOR BEFORE THE AO. THIS, IN NO WAY, CONST ITUTES FRESH TANGIBLE INFORMATION SUGGESTING THAT THE SUNDRY CREDITORS AR E BOGUS OR NO PURCHASES ARE MADE. THEREFORE, WE HAVE NO HESITATI ON TO QUASH THE RE-ASSESSMENT PROCEEDINGS, AS THE RE-ASSESSMENT PRO CEEDINGS WERE INITIATED ON MERE CHANGE OF OPINION. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDERS OF THE CIT (A). WE ACCORDINGLY ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 8 UPHOLD THE SAME AND REJECT THE GROUNDS OF THE REVEN UE IN THESE APPEALS. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ASSESSEES APPEAL: ITA NO.1754/HYD/2014 : ASSESSMENT YEAR 2011-12 14. THIS APPEAL FILED BY THE ASSESSEE COMPANY IS D IRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IV, HYDERABAD DATED 16 TH SEPTEMBR,2014 FOR ASSESSMENT YEAR 2011-12. 15. ASSESSEE-COMPANY RAISED THE FOLLOWING GROUNDS OF APPEAL- 1. THE LEARNED CIT (APPEALS) ERRED ON FACTS AND IN LAW TO SUSTAIN THE ADDITION OF RS.2 , 23,24,851/- UNDER SECTION 69C AND ESTIMATED DISALLOWANCE OF RS. 1,05 , 00 , 000/-. 2. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS NOT AGREED TO THE ADDITION OF RS. 2 , 23 , 24 , 851 / - WHICH WOULD RENDER THE APPEAL INCOMPETENT. 3. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE PAYMENTS OF RS. 2,23 , 24 , 851/- WERE MADE TO GENUINE SUB- CONTRACTORS AND THIS FACT STOOD VINDICATED FROM THE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER HIMSELF FROM THE BANK. 4. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THERE IS NO ADVERSE INFERENCE WITH REGARD TO PAYMENT TO SUBC ONTRACTORS DRAWN BY THE ASSESSING OFFICER AND THE ADDITION IS SOLELY BASED ON SUSPICION AND THEREFORE, THE ADD ITION IS LIABLE TO BE DELETED. 5. THE LEARNED CIT (APPEALS) OUT NOT TO HAVE SUSTAINED ADDITION OF RS.1,05,00,000/- WHICH IS A BALD DISALLOWANCE WITHO UT CITING ANY REASON AND WITHOUT IDENTIFYING ANY SPECIFIC INSTANC ES FOR DISALLOWANCE. ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 9 6. WITHOUT PREJUDICE TO THE ABOVE THAT NO DISALLOWANCE IS CALLED FOR RS.1,05,00,000/-, THE LEARNED CIT (APPEALS) SHOULD HAVE APPRECIATED THAT THERE IS NO ESTOPPEL AGAINST LAW A ND THE SUBSTANTIVE RIGHT OF THE APPELLANT FOR FURTHER APPEAL CANNOT BE TAKEN AWAY MERELY IN THE CONTEXT OF ALLEGED AGREEME NT. 7. THE APPELLANT CRAVES LEAVE TO ADD / ALTER/MODIFY THE GROUNDS OF APPEAL AS MAY BE REQUIRED FOR FAIR ADJUDICATION OF THE CASE. 16. BRIEFLY, THE FACTS ARE THAT THE ASSESSMENT WA S COMPLETED BY THE LEARNED DY. COMMISSIONER OF INCOME-TAX, CIRC LE 2(1), HYDERABAD UNDER S.143(3) OF THE ACT ON A TOTAL INCO ME OF RS.7,95,33,950. WHILE DOING SO, THE LEARNED ASSESSI NG OFFICER MADE ADDITIONS BY WAY DISALLOWANCE OF RS.2,23,24,851 ON ACCOUNT OF UNPROVED EXPENDITURE AND DISALLOWANCE OF EXPENSES U NDER THE HEAD OPERATING EXPENSES BASED ON THE ALLEGED CONCESSIO N OF THE ASSESSEE COMPANY OF RS.1,05,00,000. THE ASSESSING OFFICER D ISALLOWED A SUM OF RS.2,23,24,851 BEING THE PURCHASES MADE FROM THE FOLLOWING PARTIES- (I) M/S. PREMIER ENGINEERS RS. 75,62,475 (II) M/S. MALLU SLEEPERS PVT. LTD. RS. 8,55,046 (III) M/S.SAIRAM ENTERPRISES RS.1,39,07,330 TOTAL RS.2,23,24,851 THE ABOVE DISALLOWANCE WAS MADE BY THE ASSESSING OF FICER ON THE GROUND THAT THE ASSESSEE COMPANY COULD NOT PRODUCE THOSE PARTIES BEFORE HIM FOR VERIFICATION OF THE SAME, NOR THE AS SESSEE COULD FILE THE IT RETURNS OR BILLS/VOUCHERS AND BANK STATEMENTS OF THOSE PARTIES. SIMILARLY, THE SUM OF RS.1,05,00,00 WAS DISALLOWED OUT OF THE OPERATING EXPENSES BASED ON THE CONCESSION GIVEN BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE-COMPANY. ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 10 17. BEING AGGRIEVED BY THE ABOVE DISALLOWANCES, T HE ASSESSEE- COMPANY FILED APPEAL BEFORE THE LEARNED CIT(A), WHO DISMISSED THE SAME BY THE IMPUGNED ORDER, HOLDING THAT THE ASSESS EE COMPANY FAILED TO PRODUCE THE SUNDRY CREDITORS. THE DISALLO WANCE OF RS.1,05,00,000 WAS CONFIRMED BY HOLDING THAT THE AD DITION WAS MADE BASED ON THE CONCESSION GIVEN BY THE AUTHORISED REP RESENTATIVE OF THE ASSESSEE-COMPANY. 18. BEING AGGRIEVED BY THE ORDER OF THE CIT(A), A SSESSEE IS IN APPEAL BEFORE US. 19. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE- COMPANY VEHEMENTLY CONTENDED BEFORE US THAT MERE NO N-PRODUCTION OF SUNDRY CREDITORS DOES NOT ATTRACT THE DISALLOWANCE AND IT DOES NOT IPSO FACTO ESTABLISH THAT PURCHASES MADE ARE BOGUS. HE FURTH ER SUBMITTED THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF CONCESSION GIVEN BY THE AUTHORISED REPRESENTATIVE, MORE SO, IN THE A BSENCE OF ANY CORROBORATIVE EVIDENCE. 20. ON THE OTHER HAND, LEARNED SENIOR DEPARTMENT AL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AU THORITIES. 21. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. THE ADDITION OF RS.2,23,24,851 WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF FAILURE OF THE ASSESSEE TO P RODUCE THE SUNDRY CREDITORS BEFORE THE ASSESSING OFFICER. WE FIND FRO M THE MATERIAL ON RECORD THAT THE ASSESSEE COMPANY HAD FAILED TO PROD UCE THE CREDITORS EVEN BEFORE THE CIT(A), NOR PRODUCED ANY CORROBORAT IVE EVIDENCE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE C IT(A). THE ONUS OF POOF IN RESPECT OF SUNDRY CREDITORS FOR PURCHASES I S THE SAME AS IN THE CASE OF SUNDRY CREDITORS FOR LOANS. SINCE THE ASSES SEE HAD FAILED TO ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 11 DISCHARGE THE ONUS THAT WAS LYING UPON IT IN TERMS OF S.68, WE DEEM IT FIT AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER, FOR DE NOVO CONSIDERATION OF THIS ISSUE, AFTER AFFORDING DUE O PPORTUNITY TO THE ASSESSEE TO DISCHARGE ITS ONUS, AS EXPECTED UNDER S.68 OF THE ACT, AND AFTER GIVING REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE. ASSESSEES GROUNDS ON THIS ISSUE ARE AC CORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 22. AS FOR THE OTHER ADDITION OF RS.1,05,00,000, WE FIND THAT THE ADDITION WAS MADE BASED ON THE ALLEGED CONCESS ION MADE BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE COMPANY. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT CONCESSION WAS MADE IN VIEW OF DEFICIENCIES IN THE VOUCHERS VERIFIED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. THIS CONCESSION IS, THEREFORE, VALID IN LAW, SINCE IT IS BASED ON THE FACTS OF THE CASE. THE SUBMISSIONS OF THE AUTHORISED REPRESENTATIVE THAT NO ADDITION CAN BE MADE MERELY BASED ON THE CONCESSION OF THE PARTY CANNOT BE ACCEPTED. IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY BROUGHT ON RECORD, WE PRES UME THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE COMPANY M ADE THE CONCESSION UNDER VALID INSTRUCTIONS OF HIS CLIENT. THEREFORE, SUCH CONCESSION BASED ON WHICH THE IMPUGNED ADDITION HAS BEEN MADE IS VALID IN LAW. WE ARE SUPPORTED IN THIS BEHALF BY TH E DECISION OF THE APEX COURT IN THE CASE OF HIMALAYAN COOPERATIVE GRO UP HOUSING SOCIETY V/S. BALWAN SINGH (CIVIL APPEAL NOS.4360-43 61 OF 2015 (IN SLP NOS.9302-9303 OF 2013) DATED 29.4.2015, WHEREIN HON'BLE APEX COURT OBSERVED AS FOLLOWS- 33. GENERALLY, ADMISSIONS OF FACT MADE BY A COUNSE L IS BINDING UPON THEIR PRINCIPALS AS LONG AS THEY ARE UNEQUIVOCAL; W HERE, HOWEVER, DOUBT EXISTS AS TO A PURPORTED ADMISSION, THE COURT SHOULD BE WARY TO ACCEPT SUCH ADMISSION UNTIL LAND UNLESS THE COUNSEL OR THE ADVOCATE IS AUTHORISED BY HIS PRINCIPAL TO MAKE SUCH ADMISSIONS . FURTHERMORE, A CLIENT IS NOT BOUND BY A STATEMENT OR ADMISSION WHI CH HE OR HIS ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 12 LAWYER WAS NOT AUTHORISED TO MAKE. LAWYER GENERALL Y HAS NO IMPLIED OR APPARENT AUTHORITY TO MAKE AN ADMISSION OR STATEMENT WHICH WOULD DIRECTLY SURRENDER OR CONCLUDE THE SUBSTANTIA L LEGAL RIGHTS OF THE CLIENT UNLESS SUCH AN ADMISSION OR STATEMENT IS CLEARLY A PROPER STEP IN ACCOMPLISHING THE PURPOSE FOR WHICH THE LAW YER WAS EMPLOYED. WE HASTEN TO ADD NEITHER THE CLIENT NOR THE COURT IS BOUND BY THE LAWYERS STATEMENTS OR ADMISSIONS AS TO MATT ERS OF LAW OR LEGAL CONCLUSIONS. THUS, ACCORDING TO GENERALLY ACCEPTED NOTIONS OF PROFESSIONAL RESPONSIBILITY, LAWYERS SHOULD FOLLOW THE CLIENTS INSTRUCTIONS RATHER THAN SUBSTITUTE THEIR JUDGMENT FOR THAT OF THE CLIENT. WE MAY ADD THAT IN SOME CASES, LAWYERS CAN MAKE DECISIONS WITHOUT CONSULTING CLIENT. WHILE IN OTHERS, THE DEC ISION IS RESERVED FOR THE CLIENT. IT IS OFTEN SAID THAT THE LAWYER CAN M AKE DECISIONS AS TO TACTICS WITHOUT CONSULTING THE CLIENT, WHILE THE CL IENT HAS A RIGHT TO MAKE DECISIONS THAT CAN AFFECT HIS RIGHTS. WE DO N OT INTEND TO PROLONG THIS DISCUSSION. WE MAY CONCLUDE BY NOTICING A FAMO US STATEMENT OF LORD BROUGHAM: AN ADVOCATE, IN THE DISCHARGE OF HIS DUTY KNOWS BU T ONE PERSON IN THE WORLD AND THAT PERSON IS HIS CLIENT. 34. ....... IN THE LIGHT OF ABOVE DISCUSSION, WE FIND NO MERIT IN THE GROUNDS OF THE ASSESSEE ON THIS ISSUE, WHICH ARE ACCORDINGLY REJEC TED. 23. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES 24. TO SUM UP, BOTH THE APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2009-10 AND 2010-11, VIZ. ITA NOS .1817 & 1818/HYD/2014, ARE DISMISSED AND THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-12, BEING ITA NO.1754/HYD/2014 , IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE COURT ON 3.2.2016 SD/- SD/- (D.MANMOHAN) (INTURI RAMA RAO) VICE PRESIDENT ACCOUNTANT MEMBER. DT/- 3 RD FEBRUARY, 2016 ITA NO.1754 & 1818-1819/HYD/2014 M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., SECUNDERABAD. 13 COPY FORWARDED TO: 1. M/S. K.V.R. RAIL INFRA PROJECTS P. LTD., NO.12-5 -34 & 35, VIJAYAPURI, SOUTH LALAGUDA, SECUNDERABAD 500 017. 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 2 (1), HYDERABAD 3. 4. COMMISSIONER OF INCOME-TAX(APPEALS) III, HYDERABAD PR. COMMISSIONER OF INCOME-TAX II, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE IT AT, HYDERABAD B.V.S.